Short-run effects of hurricanes on the housing markets: evidence from Florida

Abstract

Purpose Many studies have shown that the intensity and the number of hurricanes are likely to increase. This paper aims to look at the immediate effects of hurricanes on the time on the market, share of houses sold and percentage of houses with price cuts in the housing market using the metropolitan statistical area-level data in Florida. Design/methodology/approach Using a difference-in-difference method, the authors estimate the impact that a hurricane has on the housing markets. Findings The authors find that a hurricane has a positive and significant effect on the time on the market. A hurricane leads to a delay of the sale of a typical house in Florida by five days. The authors test for within-year seasonality and show that these effects change with seasonality of the housing market. Markets with seasonal housing prices tend to be affected more by hurricanes than those where housing prices are not seasonal. The authors also show that effects of a hurricane are transient and fade away in a few months. The results remain significant as the hurricane intensity changes. Originality/value This is the first study to look at the short-term effects of the hurricanes and how their effects vary based on seasonality of the markets.

Housing need and search markets

“…Indeed, search and matching frictions produce trading delays in the short run that may propagate in the long run (Díaz and Jerez, 2013). Furthermore, housing market outcomes depend on appreciation expectations (Hattapoglu and Hoxha, 2014), external factors, such as seasonality (Hattapoglu and Hoxha, 2021), and natural phenomena (Dogan et al, 2022).…”